So you’re interested in investing in bitcoin, huh? Before you jump in the deep end and try to buy as much bitcoin as you can get your hands on, there are some things to consider. Since its creation in 2009, bitcoin’s trading history has been extremely volatile. In 2017, one bitcoin was worth nearly $20,000. Shortly after, you might remember the coin’s steep fall to less than $3,500 in November 2018. It has since regained some ground and currently trades at around $8,000 today. Alright, so we aren’t painting the best picture for bitcoin. But a look at the top bitcoin stocks might just change your mind.
For those who view investing in bitcoin as risky business, given its volatile nature, investing in companies who have a component of their business model in bitcoin may be the way to go. The following companies may be worth considering if bitcoin is a part of your long-term strategy.
Square (NYSE: SQ)
Square is a provider of mobile payment solutions for small businesses. By means of its hardware and software, small businesses can accept credit card payments, manage inventory and perform other important operational tasks. It has also recently branched out into other services such as business loans with Square Capital and peer-to-peer payments with Cash App.
As you might have remembered from our top blockchain stocks article, Square’s CEO, Jack Dorsey just so happens to be a strong supporter of Bitcoin. This was evident from the roll-out of the ability for users of its Cash App to buy and sell using Bitcoin. This has proven to be quite popular with its users. Analysts forecast that Square’s revenue will continue to grow exponentially in the years ahead. We can liken this to the company’s positive reputation and strong business model.
Nvidia (NASDAQ: NVDA)
Nvidia is a manufacturer of high-performance graphics cards and processors, best known for its use in PC gaming. This aspect of their business makes up about half of their revenue. Other important uses of their chips include Professional Visualization, Datacenter, and Autonomous vehicles. In 2017, Nvidia made a foray into cryptocurrency when bitcoin miners began using Nvidia’s processors to boost the power of their computers for cryptocurrency mining. Many continue to view Nvidia as a leader in graphic processing units (GPUs).
Due to this status, we believe the stock price will continue to climb given its potential for long term growth.
Joining the leader circle is PayPal in the world of digital payment processes. They also happen to consider themselves the largest digital platform. It is one of the top stocks on the stock market, with a consistent record of earnings and sales growth. As of the end of 2019, PayPal had 304 million customer accounts. That’s not all. In addition to the substantial number of customer accounts, there were more than 23 million merchants offering PayPal as a payment option at checkout.
While PayPal hasn’t added bitcoin as a currency on its own digital wallet, nor does it process bitcoin payments on its payments platform, it is offering this functionality through third parties by partnering with three major bitcoin payment processors: Bitpay, GoCoin, and Coinbase. This partnership will allow PayPal merchants to accept Bitcoin as a form of payment. Merchants will also be able to convert Bitcoin into US dollars which can later be deposited in their PayPal account.
While PayPal has started to venture into Bitcoin, it is proceeding with caution, waiting to see how things develop. As digital payments continue to evolve, we are pretty confident that PayPal will be at the forefront of this growing trend.
Microsoft (NASDAQ: MSFT)
Closely related to bitcoin stocks are those companies working closely with Blockchain technology such as Microsoft. In 2015, Microsoft became one of the first vendors to incorporate Blockchain as a Service (BaaS) into its Azure cloud computing platform. This fully managed service provides blockchain solutions to those companies seeking to build applications using blockchain technology. With it, users can create smarter, more efficient supply chains, verify transactions more quickly, and create new disruptive business models.
Partnering with a BaaS provider such as Microsoft allows these businesses to both tests and deploy the use of distributed ledgers more readily, and to benefit from the services of an experienced consultant. As the use of blockchain technology becomes more popular, Microsoft is sure to benefit.
Advanced Micro Devices (NASDAQ: AMD)
Next on our list is Advanced Micro Devices or AMD for short. AMD is a leading global manufacturer of semiconductor devices used in computer processing. In recent years, it has benefitted from the popularity of cryptocurrencies. This has resulted in the company becoming a leading provider of GPUs for mining Bitcoin and other cryptocurrencies.
The company is forecasting a long term compound annual growth rate of 20%, with most of that growth expected to come from central processing units and graphics processors for data centers. In fact, it has managed to capture increased market share from its two main rivals: Intel in the CPU race, and Nvidia, in graphics chips.
That’s not all. The company signed some crucial contracts in 2019 and was then selected by Microsoft as the chip for its next-generation Xbox. This was in addition to Sony selecting AMD for their release of the PS5 gaming console. It also won a deal along with Cray, a subsidiary of Hewlett-Packard Packard Enterprise, to power the world’s fastest supercomputer.
AMD was a beneficiary of the first rally in bitcoin in 2017. We think that the company continues to stand in a promising position to benefit yet again from another resurgence in bitcoin.
OVERSTOCK (NASDAQ: OSTK)
Overstock is an online retailer that sells a range of price-competitive goods such as home decor, bedding, furniture, and housewares. On January 9, 2014, it became the first major retailer to accept Bitcoin as payment for its goods. Since then, Overstock has been investing heavily into blockchain technology, while steadily de-emphasizing its retail business. It has a cryptocurrency unit called tZero and a subsidiary, Medici Ventures, that invests in blockchain companies. TZero is a cryptocurrency and a distributed ledger platform that we consider to be an alternative trading platform. TZero seeks to be a leading platform by which companies can make ICOs (initial coin offerings, crypto’s equivalent to IPOs).
Northern Data AG (XETRA: NB2)
In 2019, Northern Bitcoin AG merged with its US competitor Whinstone US Inc., to create one of the top Bitcoin mining companies in the world. It operates facilities in the Netherlands, Sweden, and the US, and is currently building what will be the world’s largest mining site by far in Rockdale, Texas. This tech company operates its own state of the art mining hardware using renewable resources to increase cost-efficiency. In recent years, Northern Bitcoin has shifted away from mining Bitcoin itself to planning and operating mines for large investors. This has allowed it to shield it from large price swings.
The company is well-positioned to benefit from the rapid adaptation of bitcoin as “digital gold”, and a new means of payment.
HIVE Blockchain Technologies (TSX VENTURE: HIVE)
HIVE is a cryptocurrency mining company involved in the mining of digital currencies such as Ethereum and Bitcoin. The company is headquartered in Vancouver and also happens to be the first publicly traded blockchain infrastructure company. It provides investors with a pure-play in blockchain investment. The company owns mining facilities in Sweden and Iceland. This means it also has access to low-cost renewable energy, to mitigate environmental impact and build sustainable operations.
Grayscale Bitcoin Trust (OTCQX: GBTC)
Formerly known as Bitcoin Investment Trust, this company is notable for being the first publicly traded bitcoin fund. Grayscale Bitcoin Trust gives investors direct exposure to the price of bitcoin through the traditional investment vehicle of trust. It eliminates the need for an investor to buy, sell, and safe keep bitcoin directly. Share prices will, for the most part, track the price of bitcoin, minus fees and expenses. However, let us offer you a word of caution. Shares can actually trade at either a discount or a premium to the actual bitcoin price, depending on supply and demand. If shares are bought at a high premium to the actual price of bitcoin, you might just find yourself in a risky position. On the other hand, if the share is bought at a low premium or when bitcoin is bullish, gains in GBTC can actually outpace gains in bitcoin.
Shares of GBTC can be bought and sold through most traditional brokerages at prices dictated by the market. Each share is worth approximately .001 bitcoin or 1 mbtc, meaning 1000 shares is worth one bitcoin. For reference, we also have put together a complete list of bitcoin measurement units.
Make Your Investments Count
Regardless of which stocks you decide to include in your overall investment portfolio, remember this is a constantly evolving industry. This means what you thought to be true today may quickly shift tomorrow. Ensure you have a carefully thought out plan and are aware of the new trends that may affect this industry. This will allow you to make picks that you can stand by in the face of adversity.
It is only then that you will be able to continue following through on your plan and earn a BIT(coin) of a profit.